Prepared Remarks
Arthur K. Smith
Chancellor, University of Houston System, and
President, University of Houston

House Committee on Higher Education
September 19, 1999
Austin, Texas

Thank you, Chairman Cuellar and members of the committee. I am happy to have the opportunity this morning to talk with you about two very important items for the University of Houston System and the State of Texas: Student financial aid and additional flagship research universities.

The University of Houston system is making tremendous strides in providing high-quality education for our students, while at the same time improving our administrative efficiencies.

When I came to the UH System three-and-a-half years ago, it was as both Chancellor of the System and President of the University of Houston, positions that were combined by our Board of Regents in 1996. I continued to streamline the administration further by assembling a senior executive team whose members possess both UH System and University of Houston responsibilities.

At the University of Houston, we are continuing to look for ways to fulfill our mission in the most efficient and effective ways possible, maximizing value for students and taxpayers. As an example, we are merging the College of Humanities, Fine Arts & Communication and the College of Social Sciences into a single College of Liberal Arts and Social Sciences, or CLASS.

This new college will serve as an intellectual center for the campus, one where new synergies among faculty and students are encouraged, including the development of multidisciplinary programs.

The University will also realize cost savings that result from a reduction in administrative positions, with funding to be redirected into academic initiatives.

Over the past two years, the System Administration has negotiated joint contracts on behalf of the universities for services that will benefit students and be cost-efficient for the universities. Among these are contracts for bookstore services, food services, and pouring rights.

It is important to remember that the University of Houston is the most ethnically diverse urban research university in the nation, and that our students tend to be highly non-traditional. They are older, with the average age being 25. Many of our students are the first in their families to attend college. Many have their own families. Most live off-campus and work at least part-time.

Because of these factors, we work to ensure our students have the academic and financial support they need to complete their education. Among our responsibilities as a university is to ensure access to all qualified students, regardless of their cultural and ethnic backgrounds, or their economic positions. These are factors, as you know, that historically served as roadblocks to participation in the higher education process.

They will not be barriers to an education at the University of Houston.

Over the past two years, we have made several major investments in our students. We increased scholarships by $1 million, and created two scholarship programs: The Valedictorian Scholarship Program and the Automatic Scholarship Program, which allows recruiters to award scholarships automatically to high-achieving students who meet certain academic requirements.

Along with our new scholarships, we are assisting our students through the Texas Grant Program. The University supports this vital state-funded program and we encourage you to continue it and to expand it.

Students at the University of Houston are relying more and more on financial aid. Since 1994, the average total cost for our in-state undergraduate student has risen 35.1 percent. These costs include tuition and mandatory fees, books and equipment, room and board, transportation, and other expenses associated with a college education.

In the meantime, the percent of our students receiving financial aid has gone up 26.3 percent, while the average amount of that financial aid has increased 41.4 percent.

As you can see, financial aid is important to our students. I congratulate you on your wisdom in setting up the Texas Grant Program, which is allowing well-deserving students to fulfill their dreams of a high-quality college education.

Flagship Universities

The second item I wish to address this morning is the matter of additional public flagship universities in Texas.

When the Permanent University Fund was created in the new Texas Constitution in 1876 - 124 years ago - Texas had a little more than a million citizens. Today, we have a population of more than 20 million, making us the second largest state in the nation.

The economy of Texas has changed also. It has moved from the cattle drives to the hard drives and from the oil derricks to the silicon chips.

The wisdom and foresight of the framers of our Constitution are seen in the successes of the state's two flagship universities - The University of Texas at Austin and Texas A&M University at College Station - successes built largely upon the vital margin of excellence provided over the decades by the PUF Excellence Fund.

I am here to tell you this morning, though, that Texas cannot maintain its educational and economic leadership through the 21st century under the present system of two flagship universities and a single higher education excellence fund.

This is why the Texas Tier I Research Excellence Fund initiative will be the top institutional priority of the University of Houston when the 77th Legislature convenes in January.

This initiative will expand the number of top tier universities in the state. The number and locations of these institutions, however, must be established by uniform, statewide criteria should be limited and established by objective, uniform, statewide criteria that will allow them to maximize the state's investment.

This initiative began during the last legislative session.

This proposed new category of funding would complement both the PUF and the HEAF by addressing particularly the higher education and economic growth needs of Texas.

Recent data from the National Science Foundation - the NSF -- show Texas is sixth among the states in federal funding for science and engineering research and development as of 1998, with $730 million. California led all states with more than $2 billion in funding. New York was second with more than $1.1 billion.

The NSF report lists seven Texas public universities among the nation's top 100 public and private universities. The University of Texas at Austin was the highest ranked Texas institution, coming in at number 39.

Here is why Texas trails five other states in receiving vital federal research funding. Of the ten largest cities in the country, Texas has three -Houston, San Antonio, and Dallas. And, of the ten largest cities in the country, only three do not have Tier I flagship research universities. That's right - Houston, San Antonio, and Dallas.

Texas has three Tier II research universities-the University of Houston, Rice, and Texas Tech-but the entire state has only two universities in the top tier: UT-Austin and Texas A&M-College Station.

The reason for this is found in the funding our universities receive from the PUF and the HEAF. As you know, the PUF and the HEAF are essentially the same in that both provide funds to Texas universities for capital expenditures and library acquisitions.

Two years ago as part of the Back to Basics proposal, we asked you for the funding necessary to help reverse the trends in which Texas seemed to be headed. Back then we had every confidence that with your help, we would be able to do so. I firmly believe that we are on the right road and can continue in this direction with the help and trust of the legislature and the governor. By all measurements, our recruitment, retention, and graduation rate numbers are heading in the right direction

The very important difference between them comes in the PUF Excellence Funding enjoyed by UT-Austin and Texas A&M-College Station, and to a lesser extent, by Prairie View A&M University. This excellence funding is in addition to the capital expenditure support provided by the PUF, and is in addition to general formula funding provided all general academic institutions.

The PUF excellence funding is used as salary support to attract and retain leading faculty and staff; for financial aid to help attract high-ability undergraduate and graduate students; and for investments in state-of-the-art facilities and equipment. These elements constitute the infrastructure of a Tier I research university.

Expanding excellence funding through the Texas Tier I initiative will open the doors of opportunity to our most deserving students by providing access to the highest quality educational programs. It will attract nationally ranked faculty and experts. It will create new centers of research and spin-off companies. And, it will increase the capacity of our most research intensive universities to serve their communities and the state.

Over a five-year period, Texas Tier I Research Excellence Funding at the University of Houston would be used to fill 250 new faculty positions and 100 new support positions, and to expand and enhance our educational and research infrastructure.

Texas has been served well under the current system, but the state has changed in many ways over the last 124 years. We now have a larger and more diverse population that relies on our best research universities to create the new knowledge and discover the new technologies that will produce a highly skilled and well-educated workforce who, in turn, will attract new businesses and keep our current industries strong and competitive in the global marketplace of the new economy.

I will conclude my remarks today with these questions:

  • Do today's methods of funding meet the current needs of all of Texas - both rural and urban?
  • Can our public universities address the future educational and economic expectations of Texas under current funding formulas?
  • Can Texas afford to continue to under-invest in its public research-intensive academic universities?

The Legislature has a tremendous opportunity to ensure Texas will take its rightful place among the education and economic leaders of this nation.

We do this by putting our money where our minds are.

Traditionally, universities have played and must continue to play a key role in research and economic development in this country. I am sure all of you can recognize the great companies that have been developed from the country's leading universities--Hewlett-Packard at Stanford... Netscape at Illinois... and many others. In Texas alone, research at UT-Austin has resulted in over 40 companies that generate $100 million in annual sales.

Thank you for this opportunity, and now I will be happy to answer any questions you may have.